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from the article: > One Wall Street analyst believes Amazon is still in the "early stages" in many of its key markets. With as many things as Amazon has its f

from the article: > One Wall Street analyst believes Amazon is still in the "early stages" in many of its key markets. With as many things as Amazon has its fingers into, it seems to me to have the potential to end up more profitably than Apple.

gremlinsinc 8y ago
amazon could one day rule all verticals, but if they decide to spend every penny growing even bigger, they'll still make less on paper than Apple, Amazon is in hyper growth mode all the time in a million different directions. Apple doesn't take as many risks and doesn't have their hands in as many things. Similar things could be said of Google/Alphabet as well, they seem to be doing business like Amazon.
gscott 8y ago
The solution would be for Apple to invest the profit into Amazon stock. Then take it over.
- kgwgk 8y ago
  The solution to what problem?
  - gscott 8y ago
    The solution to Apple one day not having a hit product that drives revenue.
innagadadavida 8y ago
So does Walmart, it just has a bit of image and marketing issues, otherwise Walmart has a lot more potential than Amazon.
- nhumrich 8y ago
  Walmart doesn't have it's fingers in nearly as many things. Cloud computing, autonomous vehicles, drones, ai, smart home tech, developer community, etc. Are all things Amazon has a leg in that Walmart has literally nothing.
  - toasterlovin 8y ago
    I'm not so confident that Amazon will continue to have fingers in so many things in the future. I think Amazon has figured out a pretty good formula for entering product categories that are relatively new, but we'll see if they can compete long term as more focused competitors arise. That being said, their utter dominance of retail and it's vertically related industries will probably continue for a long time. But I'm pretty skeptical of AI, smart home tech, autonomous vehicles, drones etc.
    - shaklee3 8y ago
      They failed at many things as well. Fire phone, fire tablet, etc.
      - khc 8y ago
        Is fire tablet a fail?
  - joejerryronnie 8y ago
    Walmart is into quite a bit more than you realize.
  - innagadadavida 8y ago
    Microsoft will leverage its business relations to take high paying AWS customers and leave AWS to fight Google for small startups' business. Most of the drones are made in China, Amazon does nothing special with it. Also, with the increase in Prime fees, there will be many customers that will leave. Amazon has had an amazing stock run-up in the last 2-3 years, but stock is 6-7X overpriced compared too any of their peers. Also, Bezos is too smart for his own good, and has no succession plan.
- QML 8y ago
  Investors see a lot more road in Amazon’s future compared to Walmart’s — it’s just the illusion of growth that drives stock prices.
prewett 8y ago
Amazon's retail business probably has a pretty low margin, and I'm not sure it can make it up in volume. Maybe AWS + Kindle make up for it, but I have my doubts. If you believe in efficient markets (which I, personally, think is bunk), then AMZN's 777B market cap to APPL's 926B means the Market doesn't think so, either. Apple has both large volume and high margins, which is a killer combination. On the other hand, I doubt Apple is going to grow much, whereas Amazon probably has some growth left.
- _emacsomancer_ 8y ago
  Also, a lot of profitability is in Apple's high margins. If that ceases to be a sustainable model....
  - mrep 8y ago
    Which is why Apples P/E is so low compared to compared to other tech stocks which I think is totally reasonable. I just got a Pixel 2 and like it more than my old Iphone 6S. With Apples profits so heavily tied to continual sales of 1 main hardware product line, their profit can tank in just a few years and thus I consider very risky.
- adventured 8y ago
  The math on their business is pretty straightforward. Extrapolate Amazon's retail business out to the size of Walmart, $500 billion. Assume extreme retail margins: 5% net income margins. $25 billion in profit, at max size, under the best case scenario Amazon will ever see. More likely, Amazon will never reach the retail size of Walmart today (inflation adjusted). A more likely number: maybe $12 to $15 billion in retail profit. Slap an optimistic valuation for the retail sector onto that: $240 to $300 billion valuation. Comparable to Walmart. Next, AWS at $60 to $80 billion in eventual sales, with 20%-25% margins, spitting off perhaps $15b-$20b in operating income. That business might end up worth $300b to $500b. All of Amazon's best case scenario growth for the next ten years, is already priced into the stock. That's what you would typically expect with a ~250 PE though.

gremlinsinc 8y ago

amazon could one day rule all verticals, but if they decide to spend every penny growing even bigger, they'll still make less on paper than Apple, Amazon is in hyper growth mode all the time in a million different directions. Apple doesn't take as many risks and doesn't have their hands in as many things. Similar things could be said of Google/Alphabet as well, they seem to be doing business like Amazon.

gscott 8y ago

The solution would be for Apple to invest the profit into Amazon stock. Then take it over.

kgwgk 8y ago
The solution to what problem?
- gscott 8y ago
  The solution to Apple one day not having a hit product that drives revenue.

innagadadavida 8y ago

So does Walmart, it just has a bit of image and marketing issues, otherwise Walmart has a lot more potential than Amazon.

nhumrich 8y ago
Walmart doesn't have it's fingers in nearly as many things. Cloud computing, autonomous vehicles, drones, ai, smart home tech, developer community, etc. Are all things Amazon has a leg in that Walmart has literally nothing.
- toasterlovin 8y ago
  I'm not so confident that Amazon will continue to have fingers in so many things in the future. I think Amazon has figured out a pretty good formula for entering product categories that are relatively new, but we'll see if they can compete long term as more focused competitors arise. That being said, their utter dominance of retail and it's vertically related industries will probably continue for a long time. But I'm pretty skeptical of AI, smart home tech, autonomous vehicles, drones etc.
  - shaklee3 8y ago
    They failed at many things as well. Fire phone, fire tablet, etc.
    - khc 8y ago
      Is fire tablet a fail?
- joejerryronnie 8y ago
  Walmart is into quite a bit more than you realize.
- innagadadavida 8y ago
  Microsoft will leverage its business relations to take high paying AWS customers and leave AWS to fight Google for small startups' business. Most of the drones are made in China, Amazon does nothing special with it. Also, with the increase in Prime fees, there will be many customers that will leave. Amazon has had an amazing stock run-up in the last 2-3 years, but stock is 6-7X overpriced compared too any of their peers. Also, Bezos is too smart for his own good, and has no succession plan.
QML 8y ago
Investors see a lot more road in Amazon’s future compared to Walmart’s — it’s just the illusion of growth that drives stock prices.

prewett 8y ago

Amazon's retail business probably has a pretty low margin, and I'm not sure it can make it up in volume. Maybe AWS + Kindle make up for it, but I have my doubts. If you believe in efficient markets (which I, personally, think is bunk), then AMZN's 777B market cap to APPL's 926B means the Market doesn't think so, either. Apple has both large volume and high margins, which is a killer combination. On the other hand, I doubt Apple is going to grow much, whereas Amazon probably has some growth left.

_emacsomancer_ 8y ago
Also, a lot of profitability is in Apple's high margins. If that ceases to be a sustainable model....
- mrep 8y ago
  Which is why Apples P/E is so low compared to compared to other tech stocks which I think is totally reasonable. I just got a Pixel 2 and like it more than my old Iphone 6S. With Apples profits so heavily tied to continual sales of 1 main hardware product line, their profit can tank in just a few years and thus I consider very risky.
adventured 8y ago
The math on their business is pretty straightforward. Extrapolate Amazon's retail business out to the size of Walmart, $500 billion. Assume extreme retail margins: 5% net income margins. $25 billion in profit, at max size, under the best case scenario Amazon will ever see. More likely, Amazon will never reach the retail size of Walmart today (inflation adjusted). A more likely number: maybe $12 to $15 billion in retail profit. Slap an optimistic valuation for the retail sector onto that: $240 to $300 billion valuation. Comparable to Walmart. Next, AWS at $60 to $80 billion in eventual sales, with 20%-25% margins, spitting off perhaps $15b-$20b in operating income. That business might end up worth $300b to $500b. All of Amazon's best case scenario growth for the next ten years, is already priced into the stock. That's what you would typically expect with a ~250 PE though.